JP: PMI Manufacturing Index

Thu Aug 31 19:30:00 CDT 2017

Actual Previous
Manufacturing - Level 52.2 52.1

The Nikkei Manufacturing PMI headline index advanced slightly to 52.2 in August, below the flash estimate of 52.8 but confirming an increase from 52.1 in July. The index shows activity in the sector has now expanded for twelve consecutive months.

In line with the headline index, the survey's production index shows output growth increased in August at the fastest pace in three months. Respondents also reported a stronger increase in new orders and new export orders, with the latter boosted by improved demand from Chinese customers. The survey's measure of business confidence about the twelve-month outlook retreated after last month reaching its highest level since it was initiated over five years ago, but survey respondents connie to report confidence about the likely impact on demand of the 2020 Olympic Games in Tokyo. The survey also indicated that employment levels in the manufacturing sector rose at a historically strong pace in August.

Respondents reported a moderation in cost pressures in August, with the survey measure of input costs growth at its weakest so far this year. Selling prices were also reported to have been raised only marginally, consistent with official data showing headline inflation remains low.

Industrial production data released earlier this week showed a decline of 0.8 percent on the month in July. Officials expect output to increase 6.0 percent on the month in August and to fall by 3.1 percent in September.

The Purchasing Managers' Manufacturing Index (PMI) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.